By Arnold Adler
Contributing Writer
DOWNEY — The city will contribute $10.5 million as part of a four-way agreement which will bring a Costco store and gas station to a 13.56-acre site on Firestone Boulevard and result in the Downey Nissan car dealership relocating across the street.
The allocation from the city’s general fund economic opportunities reserve will be replenished with the new sales tax revenue generated by Costco. It is estimated that sales tax revenue will increase by more than $3 million annually as a result of this investment, according to Assistant City Manager Vaniah De Rojas.
“A Costco warehouse and gas station will deliver strong financial benefits to Downey by expanding the city’s tax base and supporting long-term economic growth,” De Rojas said in a staff report to the City Council. “Beyond increased sales and property tax revenue, the project is expected to generate new jobs during both construction and ongoing operations, strengthening local employment opportunities while enhancing the city’s overall fiscal stability, she added.
The funding agreement, approved by the City Council June 23, includes Andrews Rancho Del Norte, Andrews Rancho Del Sur, BCH Holdings LLC (Downey Nissan), and Costco Wholesale Corporation.
The agreement outlines responsibilities, financial commitments and development sequencing necessary to advance a two-phase development project, De Rojas said.
Costco first approached the city in late 2022 about opening a wholesale warehouse store and gas station in the city. The site Costco was interested in was the vacant former All American Home Center lot on Firestone Boulevard and the adjacent Downey Nissan Dealership. Both parcels are owned by Andrews Rancho Del Norte.
Following the approval of the agreement, city staff will now work with all involved parties in what officials hope will be expedited into a 10-12 month process, De Rojas said.
Once that is completed, the construction of the new Downey Nissan dealership will take approximately 12 months.
The second phase of the project, the construction of the Costco store and gas station, is expected to take another 12 months, De Rojas said.
Under the funding agreement, Andrews, the property owners, will contribute up to $1.6 million in site materials and cash toward improvements needed for the new Downey Nissan dealership. Downey Nissan will make a new lease agreement for the property, De Rojas said.
Costco Wholesale will enter into a ground lease for its property and provide up to $20.8 million to fund construction of the new Downey Nissan dealership.
The city of Downey will enter into a $3 million sales tax sharing agreement with Costco and provide a $10 million lease cancellation fee to Downey Nissan. The city also will agree to share $2 million in sales tax revenue with Downey Nissan.
“Downey Nissan is a key economic anchor for the city, contributing significantly to local revenue and supporting long-term redevelopment efforts along Firestone Boulevard,” De Rojas said. “The dealership strengthens the city’s tax base, provides stable jobs, and helps drive high-quality commercial activity, making it an essential partner in advancing Downey’s broader economic goals.
“This agreement provides a means for both major economic drivers to operate in the city, and ensure Downey’s long-term financial stability.” De Rojas added.
